In WebappLoader.setRepositories(), if the war is not unpacked, it tries to create a directory /WEB-INF/classes inside the workDir. If that directory already exists, an error is thrown and the webapp does not start.
This is a change from 5.5, which didn't check the return value of classRepository.mkdirs(). mkdirs() returns false if the directories already exist. I doubt it was the intention here. Probably the intention was to throw an exception if the directory could not be created, rather than if it already existed.

I am seeing this, or similar, on Windows XP (32 bit) 7.0.6 under the same conditions (unpackWars=false)
SEVERE: LifecycleException
java.io.IOException: Failed to copy resources
at org.apache.catalina.loader.WebappLoader.setRepositories(WebappLoader.java:890)
at org.apache.catalina.loader.WebappLoader.startInternal(WebappLoader.java:601)
at org.apache.catalina.util.LifecycleBase.start(LifecycleBase.java:145)
at org.apache.catalina.core.StandardContext.startInternal(StandardContext.java:4857)
at org.apache.catalina.util.LifecycleBase.start(LifecycleBase.java:145)
at org.apache.catalina.core.ContainerBase.addChildInternal(ContainerBase.java:812)
at org.apache.catalina.core.ContainerBase.addChild(ContainerBase.java:787)
at org.apache.catalina.core.StandardHost.addChild(StandardHost.java:583)
at org.apache.catalina.startup.HostConfig.deployWAR(HostConfig.java:917)
at org.apache.catalina.startup.HostConfig.deployWARs(HostConfig.java:715)
at org.apache.catalina.startup.HostConfig.deployApps(HostConfig.java:469)
at org.apache.catalina.startup.HostConfig.start(HostConfig.java:1294)
at org.apache.catalina.startup.HostConfig.lifecycleEvent(HostConfig.java:310)
at org.apache.catalina.util.LifecycleSupport.fireLifecycleEvent(LifecycleSupport.java:119)
at org.apache.catalina.util.LifecycleBase.fireLifecycleEvent(LifecycleBase.java:89)
at org.apache.catalina.util.LifecycleBase.setState(LifecycleBase.java:343)
at org.apache.catalina.util.LifecycleBase.setState(LifecycleBase.java:323)
at org.apache.catalina.core.ContainerBase.startInternal(ContainerBase.java:1043)
at org.apache.catalina.core.StandardHost.startInternal(StandardHost.java:750)
at org.apache.catalina.util.LifecycleBase.start(LifecycleBase.java:145)
at org.apache.catalina.core.ContainerBase.startInternal(ContainerBase.java:1035)
at org.apache.catalina.core.StandardEngine.startInternal(StandardEngine.java:291)
at org.apache.catalina.util.LifecycleBase.start(LifecycleBase.java:145)
at org.apache.catalina.core.StandardService.startInternal(StandardService.java:442)
at org.apache.catalina.util.LifecycleBase.start(LifecycleBase.java:145)
at org.apache.catalina.core.StandardServer.startInternal(StandardServer.java:674)
at org.apache.catalina.util.LifecycleBase.start(LifecycleBase.java:145)
at org.apache.catalina.startup.Catalina.start(Catalina.java:600)
at sun.reflect.NativeMethodAccessorImpl.invoke0(Native Method)
at sun.reflect.NativeMethodAccessorImpl.invoke(NativeMethodAccessorImpl.java:39)
at sun.reflect.DelegatingMethodAccessorImpl.invoke(DelegatingMethodAccessorImpl.java:25)
at java.lang.reflect.Method.invoke(Method.java:597)
at org.apache.catalina.startup.Bootstrap.start(Bootstrap.java:303)
at org.apache.catalina.startup.Bootstrap.main(Bootstrap.java:431)

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